China needs consistency from Australia

Australia is not a small country: it’s the world’s 12th largest economy, it is the sixth biggest country in land area and its population is in the top quarter of the world. But sitting at the Boao Forum in southern China last weekend, I couldn’t help but be reminded that Australia is a bit player in world affairs. The discussion focused on global finance and in particular the new Japanese policy of quantitative easing, the tensions on the Korean Peninsula and the problems of the euro zone. And it focused on what George Soros and others called the most important bilateral relationship on earth, the Sino-American relationship.

To be frank, Australia barely rated a mention. But we were there. Australian business leaders contributed to the broader debate, former politicians networked with old Asian friends, Prime Minister
Julia Gillard
was one of a list of heads of government who made a 10-minute speech and
Twiggy Forrest
hosted a lively party for delegates.

The thing to remember about the China relationship is that while Australia is an important economic partner, it is not seen as a key strategic player. That’s why Australia’s relationship with China needs to be calibrated to promote our own interests in a clear and predictable way.

Over the last few years our China policy has been a mess, derailed by the triumph of domestic politics over strategic planning and positioning. The unexpected public outbursts by
Kevin Rudd
on human rights and consular matters changed nothing in China. The Rio executive,
Stern Hu
, ended up in jail for a decade and the Chinese government’s approach to tensions in Tibet and Xinjiang province has overlooked vocal advice from Australia.

But worst of all, the reference to China being a regional security threat in the preface to the White Paper on defence caused deep anxiety in China. The Australian government was implying that Australia needed to build 12 submarines and the Joint Strike Fighters to take on China. There’s an old and a good saying: if you call someone your enemy then – congratulations – they’ve just become an enemy.

Wavering approach to Chinese investment

Add to that the perception of erratic decision-making over Chinese investment in Australia. On the one hand, the government has quite rightly said it welcomes Chinese investment, but then blocked an increase in Chinese equity in Rio and debarred the private Chinese company Huawei from participating in the NBN project. This policy inconsistency hints at political opportunism rather than policy based on clear principles and goals.

And meanwhile, the free-trade negotiations, launched by the Howard government, have languished and the agreement that China and Australia would send top-level leaders to visit each other’s countries has lapsed. The visit this week by the Prime Minister and leading business figures has been an opportunity to reset the relationship. But the reset relationship has to be about more than photo opportunities and banal commitments of goodwill and mutual respect. Behind that necessary veneer of diplomacy must emerge a hard-headed strategy.

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Economic policies should be predictable

Here are some things we need to think about. For a start, the economic relationship is what makes Australia important to China, not our geopolitical location or capability. We need to leverage that. Not only are we an important source of raw materials and energy for a country of 1.3 billion people, but as of last year, Australia was the largest destination of outward Chinese investment. Of this investment, just over 13 per cent came to Australia. If we want to remain internationally relevant and get even richer than we already are in the process – and that is a not unreasonable aspiration – then we need to be a consistent and reliable economic partner for China. We have to have predictable policies not buffeted by excitable tabloid headlines and the rankings of populists and opportunists.

Secondly, we have to be realistic about the influence we can bring to bear on China on issues like North Korea, the South China Sea and the Diaoyu/Senkaku islands. Sure, we’re entitled to our opinion and to put it to the Chinese. But these issues – short of a regional meltdown – should not be allowed to dominate our dialogue with China. Whether we like it or not, Australia has very little traction in Beijing on these matters.

The Chinese will listen to Washington and sometimes an experienced Australian diplomat or politician can influence American policies in North Asia. We will have much more influence on China that way than by berating them in press releases and doorstops in Canberra or Sydney. They just roll their eyes when we do that.

And thirdly, let’s face facts: we are not going to agree with the Chinese government on issues of individual freedom and civil liberties. Again, that doesn’t mean we shouldn’t raise them; we should. That’s why I set up a human rights dialogue with China. But Australia is not going to redesign China’s political system.

The last week has been much better for Sino-Australian relations. If we can introduce some consistency into the relationship we can get back to where we were between 2001 and 2008. And if we can balance a close alliance with America with respectful and trusted relations with Beijing, that will enhance substantially our regional and even global prestige.